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Fed's Rosengren backs further easing

Fed's Rosengren backs further easing (by Greg Robb)

WASHINGTON (MarketWatch) -- Further easing of monetary policy is both appropriate and necessary, said Eric Rosengren, the president of the Boston Federal Reserve Bank, on Wednesday. "The U.S. ... needs to facilitate a more rapid recovery and monetary policy is one important tool with the potential still for encouraging faster growth," he remarked in a speech in Worcester, Mass. Rosengren said he expected growth to average a 2.3% rate over the full year and didn't think that the unemployment rate would improve from its current 8.1% level. "I do not expect growth to pick up significantly and ... do not expect marked improvement very weak labor markets," he added. The bulk of the high unemployment rate is due to a lack of demand and not structural problems like poor job skills, according to Rosengren. "Slow wage growth is evidence that companies do not have to bid up wages to find workers." Inflation as measured by the personal-consumption expenditure index is likely to be below 2% this year, and "for some time to come," he said. If downside risks from the European debt crisis materialize, more aggressive actions would certainly be warranted, Rosengren commented. The Boston Fed president is not a voting member of the Fed's interest-rate setting committee this year.